Ombudsman orders Aegon to compensate ‘misinformed’ client

The Pensions Ombudsman ruled Aegon should have to cough up £10,500 to a pension client who relied on flawed information from the insurer when deciding to take on a mortgage.

In a decision published on its website, the Ombudsman says that the client, referred to as Mr Smith, complained to the Pensions Ombudsman that he had been assured by Aegon that his scheme pension was about £3,000 higher each year than his actual entitlement turned out to be.

The Pensions Ombudsman ruled that as Aegon provided Mr Smith with flawed information on a number of occasions this amounted to maladministration.

The Ombudsman found Mr Smith relied on the information he was given about his pension when deciding to proceed with a mortgage.

The decision says: “It is true that the amount he was quoted did alternate over the years (he was also told the correct amount), so he was right to have been wary of the information he received.

“Through his IFA, he took the precaution of confirming with Aegon what the pension would be before proceeding with the mortgage and that is as far as I would have expected him to go.

“Aegon had the opportunity at this stage to correct their earlier maladministration, but they did not do so and this compounded the error.

“I am satisfied that if Mr Smith had been given the correct information at that time, he would not have proceeded with the mortgage and house purchase.

“I do not find that he should have been aware of the true amount of his deferred annuity in November 2008 having sought and obtained (through his adviser) confirmation of what Aegon believed the correct figure to be.”

The Ombudsman revealed the property that Mr Smith purchased had a shorter lease than usual and so carried with it an additional risk. In its current state it says the property would only be attractive to investment purchasers or someone in his position requiring only a small mortgage.

However, while it was foreseeable that Mr Smith would enter into financial commitments based on information about his future pension, the Ombudsman ruled it he did not consider it was foreseeable that he would take on this additional risk.

The Ombudsman revealed that having planned to pay off his mortgage a year or two after retirement, it is likely Mr Smith will be unable to do this and he will be burdened with interest payments for some time.

The Ombudsman said it had therefore decided to “relieve him of that burden.”